Do you smell something burning? Oil is leaking from the valve cover gasket on this E46 BMW 325i and dripping onto the exhaust manifold. When the car is hot, the oil would burn and thats probably what you’re smelling!

This part right here, the Mechatronics sealing sleeve (24347588725) is a very common problem on the 2002 , 2003, 2004, 2005, bmw 7-series. The transmission fluid will leak out of this, possibly because of the o-rings.